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UNILEVERS
ACQUISITION OF
BEN & JERRYS
WHITE PAPER PREPARED BY MBA STUDENTS
AT THE UNIVERSITY OF NORTH CAROLINAS
KENAN-FLAGLER BUSINESS SCHOOL

UNILEVERS ACQUISITION OF BEN & JERRYS:
BACKGROUND, MOTIVE, AND IMPACT

Authors
Manish Bisaria (MBA 2006)
Ryusuke Nakagiri (MBA 2006)
Jitschak Rosenbloom (MBA 2006)
Laura Worcester (MBA 2006)

Abstract
Ben & Jerrys started as a homemade ice cream shop in Burlington, VT in 1978.
Since then the company has grown in popularity, both for its ice cream flavors
and for its determination to generate not just financial, but environmental and
social benefits. The companys three part mission statement highlights its goal
of running a successful company using sustainable practices. In April 2000,
giant multinational Unilever acquired Ben & Jerrys in order to enter the
premium ice cream market quickly and powerfully. Ben & Jerrys loyalists
feared the Unilever acquisition would dampen the small companys
progressive environmental and social activities. Unilever however allowed Ben
& Jerrys to operate as an autonomous entity and openly pledged support for
its charitable and sustainable initiatives.

This paper analyzes the impact of Unilevers acquisition strategy on both the
Unilever and Ben & Jerrys brands. It also reviews key lessons learned from
this successful acquisition and recommends Unilevers strategy as a good
model for other multinational companies seeking to acquire sustainable
organizations that have an established brand.

Publication Date
Keywords:

Unilever, Ben & Jerry's, merger,
acquisition, integration, cause
marketing
2005

2005 Kenan-Flagler Business School, University of North Carolina, Chapel Hill, NC,
USA. Reprinted by permission. Available online at www.cse.unc.edu. This white paper was
prepared by MBA students for class MBA251B Sustainable Enterprise, taught by
professors Albert H. Segars and James H. Johnson. It is reprinted for educational purposes.
Citations and source accuracy have been reviewed, but cannot be guaranteed; clarifications
or comments may be directed to cse@unc.edu.


UNILEVERS ACQUISITION OF BEN & JERRYS:
BACKGROUND, MOTIVE, AND IMPACT
Table of Contents

1. Introduction
2. Company Histories
Unilever
Ben & Jerry
3. Motives for Acquisition
Unilevers Perspective
Ben & Jerrys Perspective
4. Impact of Acquisition
Unilevers Perspective
Ben & Jerrys Perspective
5. Lessons Learned

1. Introduction

Ben & Jerrys started as a homemade ice cream shop in Burlington, VT in 1978. Since then, it has
grown in popularity not only for its ice cream flavors, but also for its determination to reap financial,
environmental and social benefits. In April 2000, giant multinational Unilever acquired the Vermont
hometown favorite Ben & Jerrys. This white paper speculates on the lessons learned for both firms
as they reconcile their oft-differing objectives, in the immediate aftermath of the acquisition and in
practices going forward. We expect the paper to be of value to businesses already practicing
sustainability, as well as to those considering an acquisition similar to Unilevers.

2. Company Histories
Unilever
Unilever was founded in 1929 when Margarine Unie merged with Lever Brothers. Both companies
were in the business of supplying household goods, but were competing for supplies of oils and
fats.
1
Since then, Unilever's growth has been fueled by its expansion of product lines and plant
capacities as well as its continuing adaptation to new markets and technology.


In the 1980s, Unilever undertook a major restructuring, which resulted in the creation of four core
business areas: Home Care, Personal Care, Foods and Specialty Chemicals.

Unilevers plan was to
focus on leading brands within its core business units and to emphasize growth within developing
countries.
1
This plan challenged Unilever to improve operating margins and increase top-line
growth by seeking promising new acquisitions.
2
Ben & Jerry
The first Ben & Jerry's scoop shop was opened in 1978 in a renovated gas station in Burlington, VT.
3

By the end of 1988, Ben and Jerry had opened more than 80 ice-cream scoop shops in 18 states. In
continuing with their success, sales reached more than $77 million in 1990, which represents a 95%
increase over their sales in 1984 (which was $4 million).
4

It seems appropriate that Ben & Jerrys first scoop shop was in a renovated gas station that was
repaired using reused, refurbished, and secondhand materials, such as scrap sheets of aluminum.

1
"Unilever" International Directory of Company Histories, Vol. 32. St. James Press, 2000.
2
http://www.unilever.com/ourcompany/aboutunilever/history/2000s.asp
3
http://www.benandjerrys.com/our_company/research_library/timeline/index.cfm
4
Ibid.
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Since the formation of the company, Ben & Jerrys has really gone above and beyond the norm with
regards to social and environmental activism. In 1988, Ben and Jerry introduced the companys 3-
part Mission Statement, which further highlighted their goal of running a successful company
through sustainable practices.



In Ben & Jerrys history, it has been responsible for a number of successful social and environmental
initiatives including: denouncing the use of recombinant Bovine Growth Hormone (rBGH),
sponsoring the EVermont initiative to test alternative fueled vehicles (AFVs), implementing
environmentally friendly packaging and paper products, and fighting against global warming. Ben
& Jerrys numerous benevolent efforts have strengthened its brand identity and attracted many loyal
customers.

3. Motives for acquisition
Unilevers perspective
In 2000, Unilever sought to acquire Ben & Jerrys for four main reasons. First, Unilever wanted to
enter the premium ice-cream market, quickly and powerfully. Richard Goldstein, President of
Unilever Foods North America at the time of the acquisition, described his motive: Unilever
believes the super premium segment of the ice cream market will continue to grow and that the Ben
& Jerrys brand will lead that growth.
5
Apparently Mr. Goldstein was no fool, as his prediction
turned out to be true. Between 1999 and 2004, the ice cream category grew 14%, primarily due to
premium products such as Ben & Jerrys.
6

Secondly, Unilever needed strong ammunition in its battle against Nestle to become the worlds
largest ice cream company. Nestle had one-upped Unilever through a strategic partnership with
Hagen Dazs. An anonymous source, who spoke to Frozen Food Age, noted that Ben & Jerrys
international position against Hagen Dazs fit Unilevers long-term vision so well, that just about
any price could be justified.
7
The purchase rounded out Unilevers product line so that each
product offered by Nestle could be matched with a corresponding counterpart.


5
http://www.benjerry.com/our_company/press_center/press/join-forces.html
6
http://www.researchandmarkets.com/reports/c23303/
7
Unilever buy of Ben & Jerry's is 'strategic move'. Warren Thayer. Frozen Food Age. New York: May 2000.Vol.48, Iss.
10; p. 20.
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Unilevers third reason to acquire was that it saw fantastic potential in Ben & Jerrys global position
and the potential synergies of that position after acquisition. Already spread across the globe, with
brands like Breyers All Natural, Good-Humor, Popsicle, Klondike and Walls, Unilever looked to
expand further
8
. The company saw tremendous unrealized value in Ben & Jerrys, particularly
because at the time, competitors such as Pillsbury and Dreyers distributed Ben & Jerrys products
internationally. Pillsbury had just partnered with Nestle, making Ben & Jerrys reliant upon direct
competitors.
9
The acquisition would mitigate conflicts of interest by pairing Ben & Jerrys with a
distributor who had Ben & Jerrys well being in its interest, ensuring certain gains.











Ben & J errys wrapped catchy,
emotional packaging around their
every effort, a stark differentiator to
Haagen- Dazs.
One final factor drove Unilever toward the acquisition: the incredible brand
equity that the Ben & Jerrys label commands. The hometown Vermont ice
cream company possessed more personality than any amusement park, rock
band, or clothing line. Unilever chairmen Antony Burgmans and Niall
FitzGerald described their sentiment: Ben & Jerrys is an incredibly strong
brand name with a unique consumer message. We are determined to
nurture its commitment to community values."
10
The acquirers were
acutely aware that while the brand value was extensive, it was also delicate.
Should they quickly dispose of the feel-good equity drivers, the entire
purchase could be in vain.

Ben & Jerrys Perspective
Although Unilever offered a large sum of money to Ben Cohen and Jerry Greenfield to acquire their
company, neither of them wanted to sell due to the fear of Unilever not continuing forward with
Ben & Jerrys social and environmental causes. However, Ben & Jerrys shareholders were not
pleased with that decision, and thus sued Ben and Jerry until they agreed to sell. As a result, Ben &
Jerrys was acquired in the year 2000 by Unilever for $326 million.
11


In an attempt to not completely abandon Ben & Jerrys core company values, the terms of the
acquisition allowed Ben & Jerrys to operate separately from Unilever's existing U.S. ice cream
business, with an independent Board of Directors to provide leadership for its social mission and
brand integrity.
12
Additionally, in order to publicly show its support for Ben & Jerrys values,
Unilever committed $1.1 million a year to charitable causes, made a $5 million one-time grant to the
Ben & Jerrys Foundation, and promised to continue Ben & Jerrys practice of devoting 7.5 percent of
Ben & Jerrys pretax profits to a charitable foundation.
13
These terms gave Ben and Jerry some
solace with regards to the acquisition and allowed Unilever the opportunity to continue forth with
the strong brand image that Ben & Jerrys had already established.

4. Impact of acquisition
Unilevers perspective
A multinational conglomerate of standard consumer products, Unilever had little experience with
in-your-face cultures like those at Ben & Jerrys. Yet, the giant saw great potential in the subsidiary,
realized only through a listening ear and respectful bow. And to that extent, Unilever was
positively impacted by the purchase.

For one, the parent learned to value the integrity of their purchase. Michael Brockbank, vice-
president of brand communications at Unilever, described his sentiment in this respect: "Look at the
price we pay for a major acquisition and the amount attributable to the value of the brands we are

8
http://www.benjerry.com/our_company/press_center/press/join-forces.html
9
Ben & Jerry's gets a licking. (Brief Article) Polly Devaney. Brand Strategy, April 2001 p16
10
http://www.unilever.com/ourcompany/newsandmedia/pressreleases/2000/jerry.asp
11
http://www.answers.com/topic/ben-jerry-s
12
Ibid.
13
http://www.workforce.com/section/09/feature/24/00/85/ and
http://www.stanford.edu/group/SICD/BenJerry/benjerry.html
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buying, rather than the cost synergies we may be creating. You'll see that the brands are not an add-
on at the end... Within the framework of certain systems and the availability of certain tools, I would
hate to think there is a single Unilever marketing culture.
14


And with respect to Ben & Jerrys, Mr. Brockbanks colleagues have put their money where their
mouths are. The ice cream company still holds its funky music festivals, like last months Sundae on
Londons Clapham Common, where Irish indie bands played, attendees ate free ice cream, and
proceeds benefited Clapham Common. In a poll that followed the event, none of the attendees
knew that Ben & Jerrys was even owned by conglomerate Unilever.
15
The brand had been
intentionally abstracted from anything resembling less popular corporations.

Whats more, Unilever employed this abstraction right down to its handling of Ben & Jerrys internal
workings. The parent wanted subsidiary employees to go through a standard Unilever exercise of
creating a brand key, by identifying the company brand and subsequent marketing plan. But
Chrystie Heimert, Ben & Jerry's "public e-lations" director demanded that the group Ben & Jerry-ize
the process, and the group responded with the key Joy for the Belly and Soul and accompanying
diagram in the shape of an ice cream cone.
16

The ultimate test of Unilevers respect for Ben & Jerrys integrity came in decisions over which of the
previously-supported radical philanthropies the parent would continue to support. Amazingly
enough, Unilever forced absolutely no compromises. Even the Ruckus Foundation and Global
Exchange, which had trained protestors to shut down the 1999 meeting of the World Trade
Organization and break the windows of Unilevers London headquarters, continues to receive $1.1
million each year from Ben & Jerrys.
17
Only through absolute respect and humility, could Unilever
even dream of such a move.

After working with Ben & Jerrys for some time, Unilever saw fantastic financial gains that stemmed
primarily from a well-defined culture. Ben & Jerrys CEO Walt Freese best summed up the gutsy
marketing strategy in his interview with Advertising Age: We try to create trial, too, but loyal
customers are the most profitable because we're spending nothing to acquire them... Half the people
will love it, half the people will hate it, we don't try to pretend we're anything we're not. You
shouldn't be afraid of who you are." Proof: Ben & Jerrys spends nearly 50% less marketing dollars
than Hagen Dazs, yet sells the same ice cream quantity.
18

After the finance-driven parent saw the fantastic gains possible with such a
forward campaign, they attempted replication, particularly in their Dove
soap line. The crowded grooming category had seen slow growth and slim
margins, so Doves Campaign for Real Beauty addressed an unserved
niche by featuring curvaceous women on a website and in TV spots. A
shocking novelty, the ads received extensive press and word of mouth,
which really paid off. In just one year, Doves U.S. dollar sales rose 6
percent.
19

Ben-and-Jerrys-like values started popping up all over the company after
the acquisition. The Unilever corporate website is replete with social and
environmental language,
20
company ice cream freezers have been
converted from hydroflorocarbon to air-friendly hydrocarbon,
21
and the











Doves Campaign for Real Beauty
turned heads with non traditional
models, and drove great sales
gains.

14
The Trouble with Takeovers. Laura Mazur. Marketing. London: Feb 8, 2001. pg. 26.
15
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2005/08/21/ccunil21.xml
16
Corporate Crunch. Patrick J. Kiger. Workforce Management; Apr 2005, Vol. 84 Issue 4, p 32-38.
17
It's not easy being P.C.: Funding anti-globalization protesters is one price Unilever pays for Ben & Jerry's.Food
Processing, Jack Neff. Feb 2002 v63 i2 p16(2)
18
Ben & Jerry's secret formula for marketing: no apologies. Jonah Bloom.Advertising Age, 8/8/2005, Vol. 76, Issue 32
19
Behind Dove's 'Real Beauty'. Michelle Jeffers. Adweek. New York: Sep 12, 2005.Vol.46, Iss. 35; pg. 34.
20
http://www.unilever.com/ourvalues/environmentandsociety/
21
http://www.unilever.com/ourcompany/newsandmedia/pressreleases/2000/freezer.asp
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company shapes cow diets in order to reduce saturated fat in milk
22
. But while these new initiatives
seem to correlate with Unilevers purchase of Ben & Jerrys, there are still signs that Unilever hasnt
truly taken to heart all of its lessons learned.

For example, Slim Fast was acquired at around the same time as Ben and Jerrys, but with a
seemingly opposite approach. Unilever spokeswoman Jennifer Stalzer described the strategy: close
up Slim Fasts West Palm Beach office and fold it into the other U.S. food operations. Instead of
respecting the integrity of the acquisition, Unilever chose to cut costs.
23
By discounting the inherent
value of its acquisition, it is no wonder that Slim Fast performance has been widely blamed for a 26
percent fall in Unillever profits.
24

Another example of Unilever failing to learn from Ben & Jerrys involves Yves Couette, a long time
Unilever executive who joined Ben and Jerrys for several years as the CEO- Chief Euphoria Officer.
While at Ben & Jerrys, Yves took on much of the funky culture, including togas, Birkenstocks, berets
and dark glasses. But upon returning to manage Unilevers beverage division in late 2004, Couette
took none of culture with him.
25
For that reason, we speculate on the extent to which Unilever is
truly embracing all of the lessons that they are learning from Ben & Jerrys success.

Ben & Jerrys Perspective
As mentioned above, Unilevers acquisition of Ben & Jerrys has been a financially successful
endeavor. At the time of the acquisition, Ben & Jerrys had $237 million in sales and earnings of $3.4
million. During the first three years following Unilevers acquisition, Ben & Jerrys increased its
global sales by 37 percent, tripled its operating margins and expanded into 13 new countries.
26

In addition to the financial benefits of the acquisition, Ben & Jerrys improved its organizational
structure and the employees financial awareness under Unilevers leadership. In a 1994 internal
Ben & Jerrys survey, only 29 percent of employees felt that the business ran smoothly, and just half
said their supervisors were good at planning and gave them adequate feedback.
26
Unilevers
management helped guide the Ben & Jerrys business to be more organized and operate in a
financially viable manner.

From a social and environmental impact standpoint, Unilever is still trying to maintain the Ben &
Jerrys culture of giving back to the community and saving natural resources. Neither Ben Cohen
nor Jerry Greenfield feel that Unilever is being as active on that front as they would like it to be, but
as far as large corporations go, Unilever is making strides in the right direction. Under Unilever's
management, Ben & Jerrys continues to publish an annual social and environmental audit, which is
performed by an independent auditor.
27
Unilever also has been actively fighting against global
warming by investing in thermo-acoustic research, an alternative refrigeration technology that uses
sound waves to create cooling and could eliminate the environmentally harmful gases used in
mechanical refrigeration.
27
Additionally, Unilever has continued Ben & Jerrys PartnerShop
Programs, which allows nonprofit organizations to own and operate a Ben & Jerrys scoop shop
and retain all proceeds for their organization. Ben & Jerrys even waives the franchise fees and
provides support to increase the likelihood of business success.

5. Lessons Learned

For the most part, Unilevers acquisition of Ben & Jerrys has been a success from both companies
points of view. Financially, the acquisition was, thus far, an excellent move. From a sustainability
perspective, Unilever has been allowing Ben & Jerry to continue with its philanthropic culture while

22
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2005/08/21/ccunil21.xml
23
Slim-Fast leaving West Palm. Paul Owers. Palm Beach Post. July 21, 2005
24
Analysis: Slim-Fast wastes away in Unilever's hands. Marketing Week. London: Aug 11, 2005. pg. 9
25
Corporate Crunch. Patrick J. Kiger. Workforce Management; Apr 2005, Vol. 84 Issue 4, p 32-38.
26
http://www.workforce.com/section/09/feature/24/00/85/
27
http://www.guardian.co.uk/ethicalbusiness/story/0,14713,1471663,00.html
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learning a few lessons from the small company in the process. Overall, this acquisition is a good
model for other companies to follow. The major lessons that we would like other companies to take
away from this whitepaper are as follows:

1. Money is the bottom line Financial profits must be the target
2. Doing good (socially & environmentally) does help to sustain profits
3. Corporate "goodness" is contagious
4. Small divisions (such as Ben & Jerrys) can make a difference within large corporations
(Unilever)
5. Large conglomerates should respect the identity of their acquired firms
6. Sustainable companies should not fear acquisition since their acquirer has financial
incentives to continue those practices
7. Sustainability helps drive reputation (Ben & Jerrys vs. Hagen Dazs marketing dollars
example)


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